Obama: We Need a National Plan

Three culprits are to blame. First, some lenders have intentionally delayed the loan-modification process during the administration's antiforeclosure plan. Second, a backlog of bad loans exist from people who do not qualify for help. Third, the undeniable connection between defaults and growing unemployment, a situation Obama will address with Asian leaders in the coming week.

RealtyTrac, Inc. reports somewhat optimistically that foreclosures are down 3 percent nationwide, but that ignores yet another elephant in the room: the looming commercial real estate crisis.

Plain and simple: we need an expanded national plan to stop the bleeding caused by massive foreclosure.

The Making Home Affordable program, launched by the Obama Administration in February, will ultimately be judged on how many temporary modifications become permanent and actually stem the tide of foreclosures. Problem is, so far it's been released on a small scale.

Tuesday the Treasury Department released figures indicating that the Making Home Affordable modification programs reached one in five, or just 20 percent of eligible homeowners. Of the initial group comprised of 217,000 trial modifications, roughly one-third, were under way in just two hard-hit states: California and Florida.

It's time to roll this small program out - big time.

One of the biggest impediments is the multiple-party documentation required. "It's a fiasco in the making," is the way Alan White, an assistant professor at Valparaiso University in Indiana, describes the current status of mortgage-modification programs to The Wall Street Journal. White cites complaints from attorneys and housing counselors.

Could the rigmarole of paperwork literally be choking the life out of the antiforeclosure program?

At least two states are taking matters into their own hands. Minnesota delivered a setback this week to struggling homeowners by stating that borrowers don't have a legal right to loan modification. This gives mortgage companies leeway to block homeowners from restructuring their mortgages, even if they qualify on the federal assistance.

Ohio, meanwhile, has issued a bill forcing banks to speed up the foreclosure process. Now the entire process must occur within 45 days, or the bank risks losing the title to the home in 60 days. This may assist struggling homeowners who are experiencing an intentional "slow roll" from their bank in order to prevent restructuring mortgages under Obama's plan.

One thing is certain: the housing market and foreclosure issue will not retreat quietly. In fact, all indications point to ever-heated winds, swirling to conspire into a political hurricane.